The pension to which Taoiseach Enda Kenny will be entitled when he retires as a TD would cost some €5 million to buy for a private-sector employee, according to expert estimates.
The Dáil was told that the Taoiseach would be entitled a pension of about €126,000 a year, plus a lump sum on retirement of €378,000, though the Department of Public Expenditure has declined to provide an exact figure.
A pension of this level would cost in excess of €5 million to buy, according to the Association of Pension Trustees of Ireland. However, they point out that “such a pension is inaccessible in the private sector, where pensions over €2 million are taxed at around 70 per cent”.
This level of tax arises because the amount of a pension pot over €2 million is subject to tax at the higher marginal income tax rate of 40 per cent, while the money is also subject to tax and PRSI when drawn down by the taxpayer.
A number of private-sector pension experts said that a pension of the level which the retiring Taoiseach will receive would cost at least €4 million to buy in the private sector and probably €5 million or more when inflation adjustments are accounted for.
Not retired
The department has declined to outline the likely pension of the Taoiseach and Minister for Finance on the grounds that they have not retired. A department spokesman said they would not "speculate" on the likely pension as both Enda Kenny and Michael Noonan were still in office.
Retiring politicians and public servants – and private-sector employees on defined-benefit schemes – also benefit from tax rules which ensure that only those on the highest pensions are judged to have accrued benefits of more than €2 million. This is despite the fact that buying these pensions on the private market would cost much more.
While there is no official estimate of Mr Kenny's pension when he retires as a TD, it will be be close to those of former taoisigh Brian Cowen and Bertie Ahern, who receive an estimated €128,900.
Mr Noonan’s pension is likely to be almost €97,000. Mr Kenny’s pension lump sum has been estimated at about €378,000 and Mr Noonan’s at €290,000.
